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Editor's note: Over the next few months,
we'll be taking a virtual tour of U.S. cities to see how the 2008
financial crisis has changed the entrepreneurial landscape, for
better or worse. Read the first installment on New
York.

If you think Austin is the only Lone Star city with
a knack for launching new companies, think again. Head 160 miles
east to Houston – the state’s largest city – and you’ll find that
the entrepreneurial
spirit runs deep, real deep.

“People here are used to drilling holes in the ground and hoping
that good stuff comes out,” says Walter Ulrich, CEO of the
Houston Technology Center, a 13-year old
accelerator and incubator whose graduates range from education
software company Reasoning Mind to oil and gas information
technology leader Merrick Systems. “Risk taking is part of our
DNA.”

A booming oil and gas industry, which helped Houston withstand
the worst of the financial crisis, has made the city attractive
to entrepreneurs. A low cost of living and a host of new
entrepreneurial resources has made H-Town a good bet, too.

“In the last couple of years there’s been a boom in specialized
organizations,” such as incubators, accelerators, hackathons,
demo days and meetups, says Jeff Reichman, who moved to Houston
from Washington, D.C., three years ago and started January
Advisors, a consulting firm that works with startups on
everything from business strategy to product design.

These days, Houston's entrepreneurs tend to think differently
about their new ventures, too. "The traditional model here was to
leave a big company to start a company you could sell back to the
company you left,” says Kirk Coburn, co-founder and managing
director of the Surge Accelerator, which focuses on
companies that seek to solve energy problems. Now, startups
are thinking bigger and desiring to stay standalone companies
for a longer time, he says.

Houston’s long tradition as an energy hub – it’s home to more
than 5,000 energy-related firms– has helped pave the way for
what’s happening today, says Coburn, who lived and worked in
Austin for 20 years before moving back to his hometown recently.
Not surprisingly, a good deal of start-up activity is focused on
energy services and clean energy.

At the same time, the wealth created by the energy business has
spilled over to other areas, including education, the arts and
healthcare. The Texas Medical Center is the largest
medical center in the world and a hub of research and
healthcare ventures focusing on everything from curing cancer
to improving medical advice.

The city’s universities also have an entrepreneurial bent. The
University of Houston boasts one of the top undergraduate
entrepreneurial programs in the country; its RED Labs coworking space and accelerator
program gives students access to space, mentors and other
resources – including unlimited coffee and ramen – to launch
their ideas. Over at Rice University, the Rice Alliance has assisted in the launch
of more than 250 start-ups since its 2000 inception. Its
annual business plan competition will award more than $1
million in prizes; more than 133 of its past competitors are
in business today and have collectively raised nearly $400
million.

If there's one drawback to Houston's startup scene, it's that the
stable economy hasn't propagated as much entrepreneurial interest
as shaky economies in harder hit cities have. For instance, many
attribute New York City's
booming entrepreneurial landscape to the loss of Wall Street
jobs there. “One thing that’s different about Houston is –
economically – we’re countercyclical, in part because of energy
and health sciences,” says Brooke Farrell, co-founder of
RecycleMatch, an online service that connects buyers and sellers
of material waste. “Because we didn’t have the same downturn, we
haven’t seen the same kind of fleeing from best and brightest
[corporate jobs] into entrepreneurial roles.”

Those who do leave the golden handcuffs, however, will find no
shortage of advisors eager to help them with their endeavors –
and often with no expectation of payment or equity in return. The
Houston Technology Center, for example, has more than 200
volunteers spanning all areas of expertise. “Many of my investors
are from Houston, and even the people who didn't invest were
generous with their time,” says Coert Voorhees, founder of
Grammaropolis, an education startup that bills itself as
Schoolhouse Rock for the 21st Century. “The only major
drawback I see is that the concentration of talent is not as
dense here as, say, Silicon Valley.”

While there’s plenty of talent in Houston, many of those
developers and programmers are happily working for multinational
companies, Coburn says. In fact, a common complaint among
entrepreneurs in Houston is that the economy may be a little too
good.

Traditional venture capital isn’t as prevalent as it is in, say,
Austin, says Ulrich, but it’s improving. Mercury Fund, for
instance, focuses solely on seed and early-stage ventures.
Meanwhile, funding is still widely available through the Houston Angel Network,
the largest in the state, as well as the venture arms of such
companies as Shell and Chevron. “We’d like to have more venture
capital, but we have a very solid base,” he adds.

While many of the founders in Houston are born-and-bred Texans or
were transplanted here for a job, Houston is also attracting
entrepreneurs who are drawn expressly to the low cost of living,
favorable tax environment, cultural diversity and the people.
“One of Houston’s natural assets is its friendliness,” says
Reichman, “an important thing when you’re doing startups.”